July 11, 2011

 

Ukrainian new crop prices to decline

 

 

Implementation of export duties on grains and removal of the VAT refund to grain traders from July 1, 2011, will cause prices of new crop grains in Ukraine to decrease by at least 30%, according to Alex Lissitsa, President of the association "Ukrainian club of agrarian business", on June 30.

 

According to him, reduction of prices will bring fairly heavy losses to agricultural enterprises, especially small and medium-sized, taking into account the growth of grain production cost in the current year.

 

Sergey Stoyanov, General Director of Ukrainian Agrarian Confederation, said that in the current season, Ukraine will have difficulties to compete on world markets, while not cutting prices in the absence of compensation of the VAT and export duties. The expert estimated that with these factors grain traders will be able to offer to farmers the maximum price for barley with delivery to the port at the level of UAH1500/tonne (US$188).

 

As a reminder, from July 1 to January 1, 2012, Ukraine imposed the customs duties on exports of wheat (9% of the customs cost, but not lower US$24/tonne), barley (14%, but not lower US$33/tonne), corn (12%, but not lower US$28/tonne). Participants of the agricultural market repeatedly argued against imposition of the duties on grain exports, saying it would lead to rather significant reduction in domestic prices and losses of farmers.

 

Last season, the government of Ukraine limited the exports of grain, in particular through the mechanism of quotas, fearing of the price growth.

 

According to the Tax Codex, from July 1, 2011, zero rate of the VAT on export operations with grains was stopped.

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